Children with special needs may be covered by monthly Supplemental Security Insurance payments but it generally takes a lot more money than those checks to properly care for the child. This has long created an issue for these parents as they worry about what will happen to their child when the parents pass away.
Parents could not just leave money to the child in a regular estate plan because that could make the child ineligible to receive SSI. Instead, special needs trusts had to be created by the parents. Although effective, there was additional complexity as they could only be created by a parent and required a trustee other than the disabled person to handle the money.
The Achieving a Better Life Experience Act seeks to make things easier.
Recently, the Centre Daily Times reviewed the basics of the Act in "Elder law: Understanding the ABLE Act."
These specifics include:
- A person who became disabled prior to the age of 26 can create and maintain the account for him or herself.
- Funds in the account are not used to determine SSI eligibility as long as they are less than $100,000.
- Account income is not subject to income tax.
- Funds must be used for qualified disability expenses.
- When the account holder passes away, account assets must be used to pay back the government for benefits received unless they are rolled over into the account of a family member who is also disabled.
Each state must separately implement this act and it is still early in the process. An estate planning attorney should be consulted for advice on dealing with the current status of the law, potential restrictions on ABLE accounts and the possible use of a special needs trust.
For more information visit my Wichita KS Estate Planning Attorney website
Reference: Centre Daily Times (Jan. 9, 2016) "Elder law: Understanding the ABLE Act."